I’ve got $7 million saved in my late 30’s – how long will it take to reach $20 million and retire early

A Reddit user with a $7 million net worth is hoping to get to $20 million, but isn’t sure how long it is going to take — and he feels stuck as far as his cashflow is concerned.

He works at a startup, his wife is a consultant, and their combined income is $600,000, which includes $250K in illiquid stock options and bonuses they can’t actually access.  He says increasing this income would be difficult, and his expenses are likely to go up — but he’s hoping for early retirement and just isn’t sure how to get there. 

So, what should the original poster (OP) do to make sure he’s on track?

Make sure to have the right savings goal

The first step the OP needs to take is to make sure that $20 million is the right savings goal. Right now, his spending is at $250K but he expects to add around $90,000 in private school tuition once he has a second child and his kids enter middle school. By the time he adds the tuition fees and figures in the added cost of health insurance he’ll need to buy upon retirement, he’ll likely need around $370,000 per year to sustain his lifestyle. 

If he had a nest egg of $20 million and followed a safe 3.9% withdrawal rate, he’d produce around $740,000 in annual income. While it’s good to have a cushion and have a little extra saved for early retirement, there’s really no reason he would need his investments to produce this much. In fact, if he saved around $10 million — half the amount he thinks that he needs — he’d be in pretty good shape.

The OP’s savings goal shows why it is so important to really do the math before you decide how much you must have invested for retirement. Otherwise, you could end up working longer than you need and making life a lot harder for yourself than it has to be. 

How long until the OP saves up enough?

Now, the next question is how long it would take for the OP to hit his target number. Right now, he has $350K in liquid income and $250K in annual spending, so he could theoretically save around $100K a year.  However, he’s only been saving $6,000 a year recently because of home renovations, having a child, and family-related expenses. He’s also indicated he is planning another child in 2026. So, to be on the safe side, it’s reasonable to assume he’ll be able to continue saving at the $6K per month level. 

While he currently has a net worth of around $7 million, a good portion of that money is tied up in his house which is valued at $2.3 million. He has around $4.9 million invested in cryptocurrency, stocks, and retirement accounts, though, and all of this money is already working for him. So, with $4.9 million to start and $6K per month going into his accounts, within seven years, he should have just over $10 million — assuming a 10% average annual return. He’d have enough to retire assuming he set this number as a realistic goal.

However, if he really wanted $20 million despite not needing it, he would need to double that time as it would take him 14 years to reach that target. This would still allow him to leave work earlier than most, and he’d be leaving with far more money than required to support his lifestyle.

So, while the OP may feel stuck, he’s in a pretty great place financially and should be on track for a secure future if he keeps to his current path.